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Which Mexicans end up coming here?
Here is a long and valuable paper on the topic. From the abstract:
Consistent with positive selection of emigrants in terms of observable skill, emigration rates appear to be highest among individuals with earnings in the top half of the wage distribution.
There is much more along those lines. To be frank, I know this paper will not convince most of the skeptics. They will say, or perhaps think, "Yikes, what must the others be like?" But at the very least evidence should improve a debate. The next time you hear it argued that we receive "the dregs" of Mexico, send along this link.
The paper also finds that wages tend to rise in parts of Mexico where many people leave. You could argue this one of two ways. First, it might cause you to doubt David Card's view that wage effects in the U.S. are small (although the U.S. is a much bigger economy and thus the labor shift should have a smaller impact here). Second, it raises our estimate of how much Mexico benefits from emigration.
Thanks to Eric Husman for the pointer. Here is another relevant paper on Mexican emigration, forthcoming in the Journal of Economic Literature. Full of facts, as they say.
Posted by Tyler Cowen on May 19, 2006 at 05:48 AM in Data Source | Permalink
Comments
Your arguments lack political persuasion. I would suggest that you create a model and show the winners and losers. If I’m going to hire these hard working people then I like it. If I think I’m going to have to compete with them for jobs I don’t like it. If I think I’m going to have to pay for their health care after they have worked themselves into a wreak I don’t like it.
What jobs are going to be created for the current US citizens. If they are all police officer positions and nurse practitioner positions funded through federal grants then you are going to have a hard time convincing the US public that this is in their best interest.
Posted by: Huggy at May 19, 2006 7:43:50 AM
I see. So "Mexico benefits from emigration". And the US, you contend, benefits from immigration. So the immigrants, who were a negative for the Mexican economy, magically become an asset to the US economy? Some trick. Seems like something isn't being taken into account - perhaps the remittances?
Posted by: Robert Speirs at May 19, 2006 8:24:38 AM
Robert, ever heard of comparative advantage?
Posted by: Flynn at May 19, 2006 8:57:00 AM
Flynn - yes. But what's that got to do with it? The question is, how does Mexico fare better without the top half of its worker pool (If it's true that illegal immigrants are more skilled, which I have seen disputed)? Perhaps the US is a better environment in which the higher-skilled workers would be more productive, but the only way this higher productivity could enhance the Mexican standard of living is through remittances. And the productivity of even the upper half of Mexican workers is still well below that of the average native American. So how is that a benefit to America, considering the education, health and criminality costs even the upper half of Mexicans impose on the American taxpayer?
Posted by: Robert Speirs at May 19, 2006 9:16:57 AM
partisan: someone who quotes only research that supports his position.
scientist: someone who adresses all the research.
Posted by: eric at May 19, 2006 9:35:05 AM
"But what's that got to do with it? The question is, how does Mexico fare better without the top half of its worker pool..."
Without reading the paper, I would say that it does not necessarily claim that emigration itself is a benefit to the Mexico economy (or the regions of Mexico where many workers leave) -- only that wages increase in these places. One analogy that comes to mind is the plague in Europe--Europe did not fare better after a third of the population was wiped out, but I understand that the resulting labor shortage did result in some improvement in conditions and wages for peasants. Of course, Mexican emigrants aren't dead--rather they're working in the U.S. and sending large sums of money back to their families, and that *does* benefit the Mexican economy.
Looking at it another way, just as American workers are competing with Mexican immigrants for jobs, Mexican employers find themselves competing with Americans for workers, and that tends to drive up wages in Mexico where emigration is common.
Posted by: Slocum at May 19, 2006 9:38:31 AM
I should point out that the only one who used the term "dregs" in your comments was someone on your side of the argument who was setting up a straw man. One might think otherwise from the quotes.
That aside, I'm not surprised by this. Coming here does require some initiative, and doing so illegally is neither cheap nor easy. I never found the arguments that these immigrants represented the worst of Mexico convincing (I do imagine that elites are underrepresented, but that's a small fraction of the population).
However, we don't really need to know whether the immigrants represent a better, worse, or typical slice of their native population - we already have a lot of information about those that do come here, which you have so far chosen to ignore.
Speirs - if you try to think in terms of *countries* benefiting from immigration or emigration, you will end up confused simply because countries, unlike people, don't really have preferences. Is it better if a country has a lower GDP but higher average GDP? Who's to say? Individuals do have preferences, though - and sometimes we can generalize about the preferences of similar groups of individuals (such as low-wage American workers or illegal immigrants). With a whole country full of individuals I think it becomes hard to make generalizations beyond the obvious, however.
Posted by: bbartlog at May 19, 2006 10:26:24 AM
'average GDP' above should be 'average per capita GDP'.
Posted by: bbartlog at May 19, 2006 10:28:45 AM
Consistent with positive selection of emigrants in terms of observable skill, emigration rates appear to be highest among individuals with earnings in the top half of the wage distribution.
Do they disaggregate illegal and legal immigration? For legal immigration, this is exactly what one would expect, because the bottom half (broadly speaking) would be less likely to have the resources and abilities to navigate the US immigration process. On the other hand, if it is the case that people in the upper-half (or higher?) of Mexico's wage distribution are wandering through the desert, running the risk of dehydration and death, just to cross the border illegally and gain entry into the US, that suggests to me that Mexico is even more of a hellhole than I thought.
My general opinion is that legal immigration should be expanded substantially and illegal immigration punished heavily, the way it is in most other countries (the punishment, not the expanded immigration, that is), but if Mexico is that horrific even for the top half of the wage earning distribution, then I think possibly we ought to treat them as refugees or something. And start ramping up intervention in the Mexican political process, to fix whatever has gone so disastrously wrong. We can apply plenty of pressure to them, after all -- we did with the negotiations for NAFTA, if I recall correctly -- we just don't usually do so.
Posted by: Taeyoung at May 19, 2006 11:40:11 AM
Mexico benefits from Mexicans working in the United States because many of those working in the US send remittances back to family members living in Mexico. So some large number of families in Mexico are wealthier than they would be had their primary earner remained in Mexico.
This effect holds for both legal and illegal migrants, though legal ones are more likely to move the whole family to the US.
Posted by: Anthony at May 19, 2006 12:26:09 PM
Mexico benefits from Mexicans working in the United States because many of those working in the US send remittances back to family members living in Mexico. So some large number of families in Mexico are wealthier than they would be had their primary earner remained in Mexico.
Also, quite obviously, the labor pool is going to be tighter in areas where a large number of the people have left.
Posted by: mike at May 19, 2006 12:48:33 PM
Economic question.
I read that a decade ago it cost about $400 to hire a coyote to guide you in sneaking across the border. If it costs $400 to undertake this very dangerous route into the US why isn't there a thriving market in high quality forged documents at , say $500 that would allow an immigrant to cross at an official border crossing. Afterall, the Dept of Transportation reports there were 242 million legal border crossings between Mexico and the US in 2004.If just 1% of these were of individuals that remained in the US illegally it would swamp the estimates that some 200,00 to 300,000 individuals sneak across the border.
Is this a market failure?
Posted by: spencer at May 19, 2006 1:09:46 PM
Slocum has it. When part of the workforce leaves, Mexican employers are competing for the remainder.
Posted by: Eric H at May 19, 2006 1:29:42 PM
If it costs $400 to undertake this very dangerous route into the US
Coyotes aren't the only way people get across the border. Some make the journey on their own, for instance.
why isn't there a thriving market in high quality forged documents at , say $500 that would allow an immigrant to cross at an official border crossing.
My guess is that regardless of how good a fake id is, few people really want to attempt to run such a document by a law enforcement official. If anyone is likely to spot a fake, it is them. If you have ever seen some of the internal bulletins and publications that are passed around law enforcement circles, you realize that they keep quite up-to-date on trends relating to things like drugs, fake IDs, new forms of con-artistry, and improvised weaponry, and the like. Trends in false identification would quickly be spotted. Furthermore, being caught with fake ID attempting to cross a checkpoint might have more serious legal consequences than simply coming across the border undocumented.
Posted by: mike at May 19, 2006 1:32:28 PM
Dear Tyler:
Thanks for the link to Hanson's interesting article. I'm glad you are starting to realize that Card's study of immigration and wages is self-evidently dubious.
Gordon Hanson writes:
"The tendency for immigrants to settle in regions with high wage growth makes estimates of the immigration wage impact based on cross-area regressions susceptible to upward bias."
This is what I've been saying all along. Illegal immigrants don't move to Pittsburgh, they move to Las Vegas and places like that where the economy is strong. The problem is that for Americans in Pittsburgh considering moving to Las Vegas to get higher paying work, the normal premium required to get Americans to leave their family friends in their home town and move to an expensive boom town has been hammered down by immigrants. Add in the big cost-of-living differences between cities with lots of illegal immigrants and those without, and Card's study collapses like a house of, er, cards.
You would do the economics profession a world of good in the long run if you pointed out in your New York Times column that, although you still want to Mexicanize America because you enjoy Mexican cuisine and art, you have to admit that the pro-illegal immigration bias displayed by so many economists has been based less on facts and logic than on emotion, self-interest, and reflexive ideology.
Posted by: Steve Sailer at May 19, 2006 2:48:56 PM
I appreciate the papers the professor post, but not “the dreg” strawmen. No anti-immigration commentator called Mexicans dreg or anything similar. This debate has nothing to do with immigration skeptics hating Mexicans. It is just a question of analysis: Does the US benefit from Mexican immigration? Do Mexican immigrants assimilate economically and socially in America?
Both answers seem to be no. Unfortunately. We have explained why we think so (based on data from Mexican labor market, education, political, and welfare state behavior). What basis does Tyler Cowen really have to paint immigration skeptics as racists? Nada.
To the article:
1. So the 0.4 wage elasticity when the labour force changes is consistent with Borjas, consistent with figures labour unions use when negotiating wages and discussing policy, and consistent with economic theory that supply matters.
The only one it is not consistent with is Card, that finds that supply doesn’t really effect wages. Why are we still paying attention to Card anyway, who pretends the US is hundreds of separate labour markets? You can’t look at one city alone and expect big effects, theory predicts more unskilled workers will put downward pressure on all unskilled workers in the integrated American labor market.
2. It seems the two papers largely confirm what for example Sailer has written about the characteristic of the Mexican immigrants.
• The elite do not move, unlike immigrants from Asia, Europe, Africa (nations that send few immigrants to the US tend to send the “best”, education wise). Mexican immigrants tend to have fewer college graduates than Mexicans who stay behind.
• The quality of the marginal immigrants is lower than those already here (the effect is not very strong however, 54% of new immigrants have maximum 9 years of schooling, 51% of average). Nevertheless this means the already abysmal experience of Mexican immigrants OVERESTIMATES what you can expect from more immigration!
• You have a uppside down U-shaped immigration pattern, the middle moves.
The quality of those who move is only somewhat higher than those who do not, looking at the second paper (54% lacking schooling compared to 65% in Mexico on average).
3. The first paper is hard to draw conclusions from, because it looks at state data, not individuals. Richer states send more immigrants, so we should assume the immigrants are those with higher earning capability. While this may well be true (they have SOMEWHAT higher, coming from the upper tails of the working class, looking at the second paper) Let me remind you aggregate state data may not be a correct way to look at individuals.
http://www.marginalrevolution.com/marginalrevolution/2005/04/rich_state_poor.html
I was looking at the BLS time survey data. White Americans on average work 7% more per week than "Those hardworking” Hispanics. As Sailer writes the implicit byline seems to be “compared to blacks”, whites on average work 20% more hours per week than African Americans.
Again It is not our fault that the data do not support the immigration enthusiasts.
Posted by: Teller at May 19, 2006 2:49:54 PM
If you really want to see how skewed immigration to US from Mexico is just consider this data:
According to Unisco data Mexico has more than twice as much college education rate as India. Iran and Mexico have similar levels of education, Mexico somewhat higher.
According to US-census The US has 1 million Indian born, 9 million Mexican born.
Of the Indian born 69% have a bachelor degree or more.
Of Swedish immigrants 43% have a bachelor degree or more.
Of Iranian born 51% have a bachelor degree or more.
Of the Mexican born 4% have a bachelor degree or more.
Let’s repeat the comparison of 10000 $ per capita GDP Mexico and 2000 $ per capita India: 4 of 100 Mexican who come to America have college education vs. 69 of 100 of Indians.
Incidentally Indian immigrants on average earn 300% of what Mexican immigrants make. They compete with high skill American labour, and drive up the wage of unskilled Americans.
Pretty simple: either America can have restrictive and selective immigration, skimming the top from the best in the world, people who are self-selected to succeed in your country. Or you can have open mass immigration from across the border of the middle part of the labour force.
Which immigrants do you think contribute more to the US economy? Who integrates better?
Now given the 170+ comment I want ONE person to try to explain to me with actually arguments why the US is better off with immigration from Mexico than the India/Asia/Europe elite.
Posted by: Teller at May 19, 2006 3:58:05 PM
Okay:
The US if better off w/ Mexican immigration because it helps preserve political stability in that country, and an unstable neighbor on the cusp of a violent revolution would be a bad thing.
The reason we only get elites from India/Asia/Europe is because they must traverse an ocean and not a 3-strand barb wire fence.
Also, if we only allow in highly skilled immigrants then won't they take jobs that current citizens WILL do? Given that estimates seem to indicate about 10M predominantly low-skilled illegal immigrants are employed in this country it seems the demand is there for low-skilled labor, so why NOT fill this w/ immigrants from this continent?
Posted by: Gringo Salado at May 19, 2006 4:13:29 PM
Yay! Teller and Sailer. You guys are absolutely right. The immigration enthusiasts have let their emotionally-based theoretical affinities blind them to reality. They have lost all objectively and are left to hunt down any evidence, no matter how weak, that supports their fanciful nonsense. Economics, under their watch, is quickly becoming as silly a science as cultural anthropology or sociology.
Posted by: mike at May 19, 2006 4:19:06 PM
Now given the 170+ comment I want ONE person to try to explain to me with actually arguments why the US is better off with immigration from Mexico than the India/Asia/Europe elite.
Mexican immigrants help round out our competitive profile in those crucial low-skilled manual labour industries. And reduce our reliance on gimmicky robot slave labour, much as slave labour helped the South get through the industrial revolution without revolutionising industrially!
More seriously, I understand that the idea is supposed to be that as poor Mexican-immigrants perform low-skill activities on the economic ladder, they make available larger pools of better-educated American (and immigrant Indian or Chinese) labour to work in high-return economic activities, making us all richer. Otherwise, we'd have more well-educated people performing labour that doesn't take full advantage of the educational resources poured into them -- BA's serving fries, in the classic formulation.
Posted by: Taeyoung at May 19, 2006 4:41:31 PM
Gringo:
In a functioning market the demand for work is almost infinite, it is just a question of PRICE. If you lower the wages to 2 dollar per hours you can create hundreds of millions of jobs that today are simply not worth doing. “Shine your shoes, gov’nr?”.
The fact that the Mexicans are doing jobs Americans are not doing is an indicator that they are doing marginal jobs, things that you don’t have very strong demand for and thus only buy if the price is very low (otherwise you would pay to do it without the Mexicans).
That does not mean there are no gains from trade, only that the gains are probably small.
The problem is the other effects of immigration:
Massive welfare dependency and costs though the public sector, higher Crime, more long run demands for distortionary taxation and redistribution.
The small gains from exchange are swamped by the massive other costs of immigration.
One problem is that economics are pretending the logic from the free-trade and outsourcing debate applies to the immigration debate (“only dumb nativists are against it’). But in this case the pro-immigration groups are weak of facts and strong on emotions, unlike protectionism where the opposite applies.
Posted by: Teller at May 19, 2006 4:47:40 PM
Tae:
If you start from a position of only BA in a country the gains from having more low-skill labour is of course enormous.
The problem is that America is no where near that. 25% of the labour force are educated, the rest are already middle and low-skilled. The most important marketisation of services had been done through internal division of labor here even before the massive immigration.
What you have now is just increasing the already high share of low-skill labour. With services you hit diminishing margins pretty fast. Sure people might on the margin be willing to pay a few dollars to get their water re-filled twice per dinner rather than once, but that’s hardly what the economy hinges on.
The cost of somewhat cheaper services? Having to pay hundreds of billions in higher taxes, large parts of major urban areas of limits for the middle class, the equivalent of 3 Iraq wars per year in extra murders, La Raza, affirmitive action.
Posted by: Teller at May 19, 2006 5:00:14 PM
Teller,
Do you think there is also a significant cost from retardation of technological change by having an artifical supply of cheap unskilled labor? There has been some work done on mechanization in agriculture but it would seem that there must be costs in other industries where cheap labor prevents investment in labor saving capital. We know that less technology reduces the supply of good paying jobs too.
Posted by: JohnS at May 19, 2006 5:11:04 PM
The problem is that America is no where near that. 25% of the labour force are educated, the rest are already middle and low-skilled. The most important marketisation of services had been done through internal division of labor here even before the massive immigration.
What you have now is just increasing the already high share of low-skill labour. With services you hit diminishing margins pretty fast. Sure people might on the margin be willing to pay a few dollars to get their water re-filled twice per dinner rather than once, but that’s hardly what the economy hinges on.
Actually, I agree with you . . . sort of. The 25% educated figure seems low to me, but then I suppose it would, being upper-middle class, and interacting primarily with fellow upper-middle class people, and having gone to school with the children of the upper-middle class. I have no useful intuitions on that point.
More directly addressing the issue of skilled immigration from East Asia and Europe, I think the American middle class has a lot of anxiety w/ respect to immigration because they think (with some justification, I imagine), that somewhat better-educated immigrants out of India or China are in fact willing to do their jobs better for less.
As it is (or rather, as I see it) the American middle class gets to reap "rents," I suppose the term is (I did not study economics past high school, after all) by functioning in an economy where they can restrict the supply of competitors from foreign countries, and thus receive higher salaries than they might receive in a perfect, free, global market, and receiving a greatly enhanced purchasing power both due to the presence of a substantial supply of cheap immigrant labour, pushing domestic costs of production downward, and the mostly free movement of goods across borders, so that Chinese peasants (and political prisoners/slaves) can manufacture them their toys at dirt-cheap prices. And the benefits of the Asian governments' determination to buy up huge quantities of dollar-denominated debt.
A reduction in wages due to increased competitive pressures from free immigration isn't likely (as far as I can see) to produce productivity gains across the board distributed in such a way that they'll have any enhancement in their purchasing power. Poor people may be able to afford middle-class services (like legal advice or computer programming, say) at reduced prices, so that there is a distributional benefit. And the super-rich, for whom none of this really matters, will be able to receive the same at similarly reduced prices. So they benefit too.
But the middle class, broadly construed, probably isn't going to turn out as a winner from increased movement of labour across borders, because unlike the poor in America, the free movement of goods across borders hasn't already destroyed their ability to extract these "rents." Outsourcing is one source of anxiety in this regard (hence widespread middle-class opposition to it -- "where did all the good jobs go?" and all that). But even with outsourcing, they still have the advantages of geographic proximity to some of the richest cities in the world, to concentrations of wealth and commercial activity that they are lucky enough to find in their own country. And the free movement of labour (of which millions of illegal immigrants from Latin America are just the tip of the iceberg) would greatly reduce that positional advantage, because anyone could have it then, if they just move to where the American middle class are.
They . . WE, actually, are a bit like a Union, faced with the prospect of free-market competition bidding our wages down. Sure there are going to be productivity and efficiency gains across the whole of the economy, but what about our fat Union salaries and benefits? We're not in this for the whole of the economy -- we're self-interested, looking at maximising our own gain, not everyone else's. We're not socialists. And a lot of us are unconvinced that we gain that much from the free movement of labour.
For my part, I'd be happy enough to move over to a lower-cost of living area where even a salary reduced by outsourcing and immigrant competitive pressures could buy as much or more, like China (or Korea), if the opportunity presented itself (and if my language skills were a bit better--for both Chinese and Korean, my skills are rudimentary at best). But that is not true of most of the American middle class, who are, above all American, who no longer have any meaningful ties to communities in these regions far outside the borders of the US, and for whom relocation would be painful at best, and probably next to impossible.
Posted by: Taeyoung at May 19, 2006 5:51:41 PM
Taeyoung points out:
"the American middle class gets to reap "rents," I suppose the term is ... by functioning in an economy where they can restrict the supply of competitors from foreign countries, and thus receive higher salaries than they might receive in a perfect, free, global market..."
Indeed. And don't forget the low land prices allowed by the low population density of America.
All this was first noted about America by Benjamin Franklin in the 1750s. Using modern terminology, Ben pointed out that America's patrimony of high wages and low land prices meant that America could be a middle class nation of home-owners, with salutary moral and political effects.
Tyler wants to make the U.S. more like Latin America, with its spicy cuisine and amate paintings, but the problem is that along with Latin Americans, we are also importing some of their tendencies toward hierarchical class structures and self-destructive politics as well. Tyler may consider the old American Ben Franklin virtues boring, but I suspect that even he will miss them when they are gone.
Posted by: Steve Sailer at May 19, 2006 6:23:36 PM
